Sears is struggling. But its real estate isn’t

As Sears continues to struggle to stay afloat, a real estate investment trust that bought more than 200 of its stores is seemingly thriving.

Seritage Growth Properties, a spinoff company created to convert former Sears and Kmart stores, bought 235 of of the retailers’ stores three years ago. The company plans to convert a store in Hicksville, Long Island, into a 600-unit apartment complex, and another in Santa Monica, California, into “creative” offices. And a high-end shopping center is replacing an old Sears store in Aventura, Florida.

Sears received $2.7 billion in cash in the deal, which helped pay off some debt, the New York Times reported. Still, that’s not enough to help the company in the long term: The retailer announced last week that it’s closing 46 more Sears and Kmart stores.

Meanwhile, Seritage stock prices hit $49 per share this month following news that investor Warren Buffet provided $2 billion for the company’s redevelopment projects. Sear shares, on the other hand, are selling for just over $1.

Some have accused Edward Lampert, chairman of both Seritage and Sears, of using Sears to buoy his own finances. Lampert’s hedge fund, ESL Investments, made an offer earlier this month to buy Sears’ Kenmore brand for $400 million, planning to sell its appliances in other stores.

“This is a play to wring the last drop of value from Sears until there is nothing left,” Mark Cohen, a former chief executive of Sears in Canada, told the Times. “And it’s working.”

Lampert acquired Kmart in 2003, when the retailer emerged from bankruptcy, bought Sears a year later. At the time, many on Wall Street thought he was just interested in the company’s real estate holdings, according to the publication.

Still, some analysts worry that Seritage’s redevelopment efforts could take several years to pay off. Some residents in Hicksville, for instance, are pushing back on plans for the apartment complex there. [NYT]— Kathryn Brenzel